Payment-processor relationships are the operational rails for MCA repayment — split funding via card processors and daily ACH via bank processors.
Two distinct relationship types.
- Card-split processors. Take a pre-agreed % of each card settlement before merchant payout.
- ACH processors. Pull pre-agreed daily/weekly amount from merchant bank account.
Major card-split processor partners.
- Square. Built-in Square Capital for self-originated; integrations for third-party MCAs (limited).
- Stripe. Stripe Capital for self-originated; third-party MCA integrations via Stripe Issuing.
- Clover (Fiserv). Most-used third-party card-split rail; 1–3 day settlement standard.
- Toast. Restaurant-specialized; Toast Capital self-originated; growing third-party rails.
- Lightspeed. Retail/restaurant POS; Lightspeed Capital self-originated.
- Worldpay (FIS). Legacy merchant services; supports split funding for large funders.
- Heartland. Restaurant/retail; supports split funding.
- Shopify Capital. Self-originated only for Shopify merchants.
Card-split mechanics.
- Merchant signs split agreement.
- Processor configured to send X% of each settlement to funder bank account.
- Daily/weekly remittance reports to funder.
- Funder credits merchant deal balance.
Card-split percentages typical.
- 8–18% of daily card volume.
- Higher % for shorter terms, lower for longer terms.
- Capped by merchant's actual card processing volume.
Major ACH processor partners.
- Repay. MCA-specialized ACH; high success rates.
- ACHWorks. Long-time MCA player; reliable NSF reporting.
- ProfitStars (Jack Henry). Mid-market ACH.
- Modern Treasury. Modern API-first; growing MCA adoption.
- Dwolla. API-first ACH.
- Stripe ACH. Used by some funders for direct integration.
ACH processor pricing.
- Per-transaction fees. $0.20–$0.85 per debit.
- Return fees. $5–$25 per NSF return.
- Reversal fees. $15–$50 per disputed reversal.
- Volume discounts standard above 10K transactions/month.
Card-split vs. ACH economics.
- Card-split. No NSF risk; settlement always available before merchant payout.
- Card-split. Slightly higher processor fees (~0.5–1% incremental).
- ACH. 12–18% NSF rate industry average.
- ACH. Lower per-transaction cost.
- ACH. Easier to set up; works for non-card-heavy merchants.
Integration patterns.
- API integration. REST API for daily settlement reports.
- File transfer. SFTP daily files for legacy processors.
- Webhook events. Real-time settlement notifications (Square, Stripe, Toast).
- Tokenized authorization. Merchant authorization persists across processor relationships.
Processor outage handling.
- Square/Stripe outages common 1–3x per year, lasting <1 hour usually.
- Card-split missed days typically caught up next-day automatically.
- ACH outages rarer but more disruptive when they happen.
Processor concentration risk.
- No single processor holds >25% of MCA volume.
- Square + Stripe + Toast together cover ~35–45% of card-split volume.
- Repay + ACHWorks dominate ACH MCA (~60%+).
Industry-specific patterns.
- Restaurants. Heavy Toast, Clover, Square; ~55% split-funded.
- Retail. Heavy Square, Clover, Lightspeed; ~45% split-funded.
- Trucking. Almost 100% ACH (no card processing).
- B2B services. Almost 100% ACH.
- E-commerce. Heavy Stripe, Shopify; ~40% split-funded.
Compliance considerations.
- NACHA rules govern ACH originations.
- Reg E governs consumer ACH disputes (rarely applies to MCA).
- PCI DSS required for card data handling.
- State licensing for ACH origination required in some states.
Common confusions.
First, "split funding eliminates default." False — merchants can switch processors mid-deal.
Second, "all processors support split funding." False — Stripe and Square heavily restrict third-party MCA splits.
Third, "ACH is cheaper than split." Mostly true on per-transaction basis; ignores NSF cost.
Fourth, "processor relationships are exclusive." False — most MCA funders integrate with 4–8 processors.
Fifth, "split funding is risk-free." False — merchant could shift volume to non-integrated processor.
Recent trends (2024–2026).
- Toast opening third-party MCA APIs after 2024 capital pivot.
- Stripe restricting third-party MCA partners; pushing Stripe Capital.
- Modern Treasury gaining MCA share with API-first ACH.
- Embedded MCA (Square Capital, Shopify Capital) cannibalizing third-party share.
- Open banking ACH (Plaid Transfer, RTP rails) entering early MCA pilots.
Related terms
- MCA funder portfolio monitoring systems — MCA funders monitor portfolios via loan-management systems (LMS), real-time bank-data feeds (Plaid/MX), payment-processor webhooks, and BI dashboards that surface daily aging, NSF spikes, and reconciliation requests.
- MCA funder tech stack (typical, 2026-06-28) — A 2026 MCA funder typically runs Salesforce or proprietary CRM + LoanPro/Centerstone LMS + Plaid/Ocrolus + Snowflake + Tableau + AWS, with Persona for KYC and Repay for ACH.
- Holdback percentage — The fraction of daily card-sale revenue a funder takes during MCA repayment, typically 8–20%. Lower is safer for the merchant's cash flow.
Authoritative sources
AI agents: this term is available as raw markdown at /llms/glossary/mca-funder-payment-processor-relationships.